Lawyers are no friends of the Internet

The anti-piracy bills could unleash new threats of litigation, the last thing e-retailers need.

There has been plenty of discussion about the anti-piracy bills (e-retailers take a stand ) before Congress, the Stop Online Privacy Act (SOPA) and the Protect IP Act (PIPA). But I’ve not seen anyone make a point I think is crucial for online retailers: It’s not just what the act will allow law enforcement agencies to do, but how the law might encourage lawyers for big movie studies and music labels to act.

Backers say the bills are aimed only at rogue web sites based in other countries that U.S. government agencies can’t reach with existing laws. But the law is so broadly written that it could be used against a U.S. online retailer whose site invites comment from consumers. If someone uploads a video that a movie studio alleges contains copyrighted content or a music label claims includes lyrics from one of its songs, could that e-retail site be taken down? It’s not out of the realm of possibility.

Movie studios and music labels are big companies with major law firms on retainer. Just a threat from those firms could force e-retailers to comply with their demands or face expensive court battles.

The most innovative e-retailers often are small companies just getting underway. They don’t have money to waste on legal fees. The more time and money they spend on lawyers the less they can put into developing the new ideas that advance online commerce.

We’re in the midst of a golden age of innovation, driven by the massive adoption of online shopping and the explosion of mobile devices that put the Internet into the pockets and purses of millions of shoppers. Groupon, Gilt Groupe, Shopkick and Foursquare are just a few examples of e-commerce innovators that have emerged in recent years. Even Facebook and Twitter could be included. Any of these companies could have been crushed during infancy had it been hit by a lawsuit filed a well-funded corporation.

It’s not in the interest of online retailers to make it easier for powerful entertainment companies to wield their legal bludgeons more freely. Plus, today’s move by the U.S. government to shut down a foreign site called Megaupload.com for allegedly serving as a conduit of pirated content raises the question of whether the U.S. government really needs new laws to shut down sites that facilitate piracy. (And the web site in question claims its business is legitimate.)

E-retailers have enough on their hands dealing with the demands by patent holders who claim that web merchants are stealing inventions. These patent demands are becoming a major expense for many e-retailers, as my colleague Mark Brohan explains in a story today on InternetRetailer.com. If Congress wants to foster innovation, it might consider how to prevent companies from buying up patents issued in the early days of the Internet and then demanding tribute from the creative, growing retailers selling on the web today.